YouTube is quickly becoming a premier site with plenty of content and lots of traffic, but is it a real business? Web Blogs Inc. Chairman Jason Calacanis doesn’t think so, citing a couple reasons:
4. YouTube is not a real business (or an innovative business). This is my main point. Let’s not look at YouTube’s page views and claim they are some amazing business. Napster and Kazaa had a ton of traffic too–it just wasn’t web-based. If you could do an Alexa graph of Kazaa, BitTorrent, Usenet, and the old Napster they would be number one through four on Alexa!
Watching DIGG, Engadget, and MySpace climb in the rankings? Those are real businesses. If those sites added the ability to distribute stolen video in two clicks they would shoot up to the top 10 sites!
This is just a part of his post.
My interpretation of Jason is that based on his business experience, he fails to see how YouTube can be a legitimate revenue turner. He is used to journalism and related properties. Not all business plans require instant revenue. In the case of an online property, whats important is the gathering of traffic. And YouTube has realized that the quickest way to do that is to offer “all” content both copyrighted and legal to be distributed through their site. Its always about the content and they know this.
Once they have the traffic they want, they can cut the illegal stuff and still retain a large enough audience to generate revenue from. Ideas that come to mind include:
1) Video advertisements
2) A subscription service for viewers (not the smartest move)
3) Content deals with NBC, CBS etc, maybe charge per download for premium content
4) Lets make people register before they can view the videos, now we have e-mail addresses and personal information
There are a million ways to generate revenue once the traffic is there.
As for there being copyrighted content on there, keep in mind that YouTube is like a message board. They are not posting the content themselves, their readers are. As long as they do a “best effort” to remove copyrighted material, they should be ok. Because the content is user submitted, there is a certain amount of liability relief so-to-speak.
In my opinion, Digg.com is no different than YouTube, they both show user submitted content, YouTube just happens to show video content rather than links to stories. The BIG difference is that Digg is providing links out, they are not posting written copyrighted material, and I get that, which is why YouTube needs to be very careful.